Germany kicks off biggest hospital reform in history

BERLIN — Germany on Friday paved the way for the biggest reform of the hospital sector in its history, which is likely to be the last major project of Chancellor Olaf Scholz and his Health Minister Karl Lauterbach before national elections at the end of February.
“We have the most expensive hospital system in Europe, costs are rising sharply, but quality is not improving,” Lauterbach said Friday. “We are now overcoming this system.”
Part of the reform is a so-called Hospital Transformation Fund of up to €50 billion over 10 years to make the system more efficient and reduce costs. The  sector accounts for the largest share of Germany’s extraordinarily high health care spending, which totals around €400 billion a year.
The law was passed by the Bundestag in mid-October and cleared its final hurdle on Friday morning, when it was approved by the Bundesrat with a narrow majority.
The Bundesrat represents the federal states, which are responsible for hospital planning in Germany and have been very critical of the project. It was unclear until the last minute how the states would vote.
Brandenburg Premier Dietmar Woidke — a social democrat like Scholz and Lauterbach — even fired his reform-minded health minister during the debate to ensure his vote against the plan in its current form.
Part of the reform is a new reimbursement system for hospitals. Currently, hospitals receive money based solely on the number of operations they perform. Under the new system, however, 60 percent of the costs will be paid through a fixed amount for providing staff and equipment for specific surgeries. The new system is designed to eliminate incentives to perform more and more procedures, some of which are not medically necessary.
At the same time, hospitals must meet strict quality standards to receive money for operations. The goal is that after the reform, only large, well-equipped hospitals will perform complex operations such as cancer treatment. The transformation fund is to support this reorganization and cover the costs. Part of this includes mergers and closures of the approximately 1,700 hospitals in Germany.
The law is scheduled to take effect on Jan. 1, 2025, but the new structure is to be implemented over several years until 2029.